Gov. Patrick orders cuts to close $540 million budget hole

Posted
Wednesday, December 5, 2012 8:59 am

By Bob Salsberg, Associated Press

BOSTON -- Gov. Deval Patrick on Tuesday ordered spending cuts across state government to close a projected $540 million budget hole that he pegged largely on economic uncertainty caused by the looming "fiscal cliff."

Patrick, who called the actions a "sensible and prudent" approach to a revenue shortfall that had been developing since the start of the fiscal year in July, said he would not be seeking any increase in state taxes to address the gap.

The governor said he would use his authority under state law to cut executive branch spending by $225 million, equivalent to about 1 percent of the budget for those state agencies.

He also said he would ask the Leg islature to ap prove a 1 percent reduction in the budgets of the Mas sachusetts court system and other state constitutional offices, and for a $9 million cut in unrestricted local aid to cities and towns.

The governor took the action despite a slight uptick in state tax collections in November, but officials concluded that was not enough to offset the overall lower-than-expected collections for the current fiscal year.

Discussions with business leaders and economists have left Patrick convinced that the revenue shortfall stems from the ongoing budget deadlock in Washington.

"By all accounts, that uncertainty and the resulting slowdown in economic growth is the direct cause of our budget challenges," Patrick said. "Economists agree that the fiscal cliff is keeping a tremendous amount of private capital on the sideline. Business leaders I meet with confirm that fact."

The governor warned that if President Barack Obama and Congress fail to reach a deal by Dec. 31, triggering tax increases and federal budget cuts, it would likely result in a further downward revision of $300 million in revenue projections for the fiscal year.

In addition to the spending cuts, the governor said Tuesday he would also ask the Legislature to transfer $200 million from the state's reserve fund.

More than 700 new positions in state government that had been included in the fiscal 2013 budget will go unfilled, he said.

Geoffrey Beckwith, executive director of the Massachusetts Municipal Association, said he will urge lawmakers to reject the proposed cut in unrestricted local aid.

"Every community will be impacted," Beckwith said. "The 1 percent sounds small, but it will destabilize current budgets that are in place and communities will have to take action."

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